I’m not seeing how a mortgage deduction has a direct impact on the price of housing. According to new estimates compiled by the nonpartisan Joint Committee on Taxation — Congress’ top technical resource on all tax law matters — the mortgage interest deduction is not quite as big a hole in the federal budget as previously estimated.

Home values are down in many parts of the country, and lower purchase prices and far stricter underwriting mean smaller mortgage amounts. Interest rates have hit half-century record lows, and have remained at or near those floors for much longer than anyone had estimated. Thirty-year mortgages at 4.5% obviously require much less in monthly interest payments than do similar loans at 5.5% and 6%.

Again, mortgage interest is not even a major issue if mortgages have shorter terms. The banks and mortgage companies make a killing on homeowners thanks to the terms of conventional mortgages. By the time a 30-year mortgage is paid off, the borrower has paid for the house multiple times over.

IMO, the reason the mortgage interest deduction is relevant is because of how much interest people have to pay over the course of their homeowner loans. If you’re arguing to make it less relevant, then deal with the financial institutions that make it a standard practice of making 30-year loans.

http://www.veteranstoday.com/2010/07/15/mortgage-interest-deduction-an-unfair-subsidy-for-the-rich/

The general argument is that mortgage interest deduction and deduction for property taxes primarily benefit taxpayers with income of more than $100,000.

Fine, except that the average wage in the United States is $40,000 per year. A two-income family bringing in $50,000 per year in 2011 is not exactly what I call high-rollers.

The reason why mortgage deduction is a big write-off is for homeowners because homeowners are gouged by how much of their money does not go toward the principal of the mortgage. The first several years is essentially going to principal. If you get a 30-year mortgage, the amount you paid for the house is usually more than twice what was the value of the house when you bought it. Even with a 15-year mortgage, you can add roughly another 50% to the value of the mortgage.

Second, I know I certainly didn’t buy my house with the consideration of a mortgage deduction. That sounds more like the thinking of someone who is looking at a house as an investment property, and not a place where you plan to live for a long period (or live for the rest of your life).

Third, I’ve read other articles on this topic and the thought process in those articles seems to revolve around the percentage of homeowners in this country and that the deduction does not favor the poor and working class. Generally, the argument was the mortgage deduction is not relevant to taxpayers with a household of less than $100,000. In 2009, the national wage in the United States was $40,ooo per year — and in some parts of the country, that is hardly anything. Even where I live in a small town in the South, that’s not a killing by any measure. That’s not even counting the relative cost of living in areas. Not to mention nearly 70% of people are homeowners.

Sometimes, people get into this political rhetoric of “taking away stuff from the rich” and it seems like they think the standard of living today is like it’s in the ’50s. The median house in the United States is $148,000 in the South; $237,000 in the North; $140,ooo in the Midwest; and $204, ooo in the West. It generally takes two people to make a mortgage payment in most middle-of-the-road neighborhoods.

Make mortgages more reasonable (IMO, it shouldn’t be more than 10 years) which will lower the housing prices and that will take care of the mortgage deduction issue.